The Future Of OPEC Is Underground

Roughly two years ago, in the last days of November 2016, Vienna became the epicenter of global oil developments. There, a ground-breaking agreement was concluded, the Vienna Agreements (also known as OPEC/OPEC+), which were crucial to the stabilization of crude markets that occurred afterwards. In a way, all the oil producing nations that managed to bounce back into profitability and overcome the severe hardships of the drastic 2015 price fall owe their success to the Vienna agreements. Now, Vienna is once again the capital of the oil world – two rounds of consultation took place there this week, first between OPEC member nations, then with the inclusion of OPEC+ members within the framework of the Joint Technical Committee, co-chaired by Saudi Arabia and Russia.

The two-day Vienna summit was an emotional rollercoaster – starting with high hopes, it quickly transformed into a dreary spectacle, only to bring forth an unexpected deal. Initially it seemed that the Saudi Energy Minister Khalid al-Falih will be able to ram through a deal within OPEC and then the only issue to sort out would be Russia’s contribution. Much of the speculation thereafter has focused on Russian Energy Minister Alexander Novak flying back to Saint Petersburg, allegedly to consult the cuts with President Putin, and Russian reluctance to commit to a 300kbpd production cut. Everything was ready, it seemed – the baseline month (October), the overall cut level (after lengthy…

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